British-based energy and home services company Centrica plccompleted its acquisition of coveted Energy America LLC this week,announcing it will take full ownership and management control ofthe gas and electricity marketer that serves nearly 400,000 U.S.residential and small business customers. Centrica, which claimedits first stake last summer, picked up the outstanding 73.5% stakeheld by Sempra Energy for $56 million in cash.

The agreement follows Centrica’s recent acquisition of DirectEnergy Marketing Ltd. in July, which included a 27.5% stake in EnergyAmerica (see Daily GPI, Aug. 22, July7). Centrica now has full ownership of Energy America’s customerbase, which is centered in Georgia, Maryland, Michigan, New Jersey,Ohio and Pennsylvania, giving it a platform to develop itsU.S. market.

The acquisition also creates an opportunity to integrate thecompany into Centrica’s Direct Energy operations in Toronto and itsenergy resources division in Calgary. Direct Energy, the largestunregulated natural gas retailer in North America, has about820,000 customers mostly in Ontario. It also owns and operatesnatural gas reserves in Alberta, which provide up to 20% of itsrequired supply.

Direct Energy’s customer services unit, Natural Gas Wholesalers,provides marketing and call center services to Direct Energy andEnergy America customers — giving Centrica the opportunity tosecure more customers and more important, to secure inroads intonot just Canada but the U.S. marketplace as well.

To consolidate Direct Energy’s ability to serve existing andfuture customers, Centrica acquired Canadian-based Avalanche EnergyLtd. earlier this month for C$253.5 million. The Canadian gasproducer was set up in 1997, and nearly 90% of its assets are gasproducing.

The company said the acquisition “will help reinforce Centrica’sposition as the largest unregulated energy sales operation in NorthAmerica.” Centrica CEO Roy Gardner said the “milestone” offered thecompany a “compelling energy proposition, superior service andcustomer choice” in the number of U.S. households, and saidCentrica plans to build its base of customers.

For Sempra, the agreement allows the company to generate cashfor reinvestment in “other key areas of our business strategy,”said Donald E. Felsinger, group president of unregulated affiliatesfor Sempra Energy. “This agreement is the right move at the righttime for us,” he said, adding that Sempra Energy currently is”exploring additional mass market opportunities for energy relatedservices via the Internet and other sales avenues.”

Energy America was jointly developed by Direct Energy Marketingand two subsidiaries of Sempra Energy, Sempra Energy Trading andSempra Energy Information Solutions in 1998

The transaction is expected to close by the end of the firstquarter of 2001 following regulatory approvals.

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